We want traders to succeed

Getting Started
with Bitcoin Trading
A comprehensive guide for the cruptocurrency trader by Tickmill

Losses can exceed the initial deposit www.tickmill.com

Table of Contents
Introduction ............................................................................................................................... 3

01 Understanding Bitcoin ............................................................................................................ 4

1.1 What is Bitcoin ................................................................................................................... 5

1.2 How does Bitcoin work .................................................................................................... 6

1.3 Obtaining Bitcoins ............................................................................................................. 7

1.4 Using Bitcoins .................................................................................................................... 8

1.5 Key Milestones in Bitcoin’s History ................................................................................ 9

1.6 Bitcoin vs. Mainstream Currencies ................................................................................ 11

1.7 The Pros and Cons of Bitcoin ........................................................................................ 12

02 The Bitcoin Economy ............................................................................................................. 13

2.1 How Bitcoin Gained Ground Over Time ....................................................................... 14

2.1 What Drives the Price of Bitcoin .................................................................................... 15

2.2 Bitcoin Supply and Demand ........................................................................................... 16

03 The Future of Bitcoin .............................................................................................................. 17

3.1 Projections about the Future of Bitcoin ..................................................................... 18

04 Trading Bitcoin ......................................................................................................................... 19

4.1 Understanding Bitcoin Volatility .................................................................................... 20

4.2 Trading Strategies and Risk Management .................................................................. 21

How to trade Bitcoin with Tickmill ....................................................................................... 22

Why Trade Bitcoin with Tickmill ........................................................................................... 23

Why our Clients Choose us .................................................................................................... 24

Glossary ..................................................................................................................................... 25

Getting Started with Bitcoin Trading 2

Introduction
The idea of digital currencies has existed for years. However, despite some effort on the part of
programmers, none proved viable. Then, less than a decade ago, Bitcoin entered the sphere of
cryptocurrencies to become not only a cultural phenomenon, but also a political and economic one,
holding the fiscal eye of the world captive through its exciting course.

Bitcoin has quickly become a magnet for serious traders around the world due to its bullish trend
and short-term volatility. In just 7 years the value of Bitcoin has increased from a quarter-of-a-cent to
above $17,000 and today has a market capitalisation of roughly 279 billion.

Tickmill responded fast to the surging demand for Bitcoin trading, offering its Clients access to
the cryptocurrency market to diversify their portfolio with a resilient and high-performing trading
instrument while enjoying competitive trading conditions.

Our commitment to empowering traders to achieve excellence is embodied in our motto ‘We want
traders to succeed’. In line with approach, we strive to add extra value to our Clients’ trading experience
by offering superior education and knowledge to trade the markets with confidence.

This handy ebook aims to give you an all-round insight into the concept of Bitcoin, the technology
behind it, how the cryptocurrency fits in the broader economy and important aspects to pay attention
to with regards to Bitcoin trading.

We hope you enjoy reading this guide and get all the necessary information you need to trade Bitcoin
effectively.

The Tickmill research team

Getting Started with Bitcoin Trading 3

01
Understanding Bitcoin
This chapter delves into the fundamentals of Bitcoin including interesting information on how the
digital currency works, how bitcoin transactions are performed and the characteristics that make
bitcoin unique against conventional currencies.

Getting Started with Bitcoin Trading 4

What is Bitcoin?
Bitcoin is a form of digital currency and payment system that uses decentralised technology for
secure payments and storing money without the intervention of a central authority or financial
institution. All bitcoin transactions are recorded in a transparent public ledger known as blockchain.
Bitcoin is deemed an ideal tool for private, anonymous transactions, and a payment method of choice
for retail purchases. Others simply speculate on the price movement of bitcoin, hoping to gain from
potential increase in value.

Bitcoin trading is deemed an alternative investment to fiat currencies. It has

revolutionised the world of finance just as the Web has proven to be a paradigm
shift in the publishing world.

Getting Started with Bitcoin Trading 5

How does Bitcoin work
Bitcoin is one of the latest innovations of the financial world known for its transparency and
decentralisation. Bitcoin is created digitally through the process of ‘mining’ which involves solving
complex math problems with computers. Bitcoin users need to set up a bitcoin wallet to be able to
receive, store and send bitcoins to other people in the network. The bitcoin wallet comes in a variety
of forms – desktop, mobile, web, paper and hardware.

Bitcoin ownership is secured by a special code called a cryptographic key pair which includes a public
and a private key. The public key is transformed into a bitcoin address that is used to make or receive
bitcoin payments. The private key is used to create a digital signature that sends bitcoin from one
address to another. All bitcoins in circulation and their transactions are recorded on the blockchain.
Unlike bank transactions, no middleman is required to verify the transaction.

Because of its virtual nature, bitcoin is not backed by any real-world commodity or a central bank.
Instead, it relies on the law of supply and demand just like the value of a stock or a property does.
Therefore, bitcoin’s price fluctuates based on the number of people who want to buy or sell it at a
given moment.

Bitcoin can be traded for euros, dollars, yen and other currencies in real time.

Blockchain network concept

Getting Started with Bitcoin Trading 6

Obtaining Bitcoins
Bitcoins act like cash but they are mined like gold. So how does someone get hold of Bitcoin?

There are three main means to obtain Bitcoin:

Buying on Accepting them for Mining

an exchange good or services

Simply put, mining is the process of discovering new bitcoins, just like finding gold. Miners mine
bitcoins by using powerful computers to solve complex algorithms which generate a series of unique
numbers which form the bitcoin.

Miners get compensated by the Bitcoin network for generating new bitcoins and verifying transactions.
When verifying a transaction, the miner gets a small fee out of that transaction for his work. However,
the more miners join the network and bitcoins are discovered, the more mining difficulty increases.

The process of mining offers a valuable service to the bitcoin network: decentralised transaction
recordation and validation. Bitcoin uses the proof-of-work system to distinguish legitimate
transactions from attempts to re-spend coins that have already been spent elsewhere (double-
spending). Blockchain technology ensures the validity of a transaction is recorded on a distributed
system of registers, all of which are connected through a secure validation system.

Getting Started with Bitcoin Trading 7

Using Bitcoins
Although Bitcoin is a relatively new form of currency and is not widespread in the real world, the
number of vendors that accept the digital currency is increasing steadily and includes both online
and physical vendors.

Once a user has acquired bitcoins and has created a bitcoin address, he can use them for an online
transaction with a company that accepts bitcoins as a payment method. While, the transaction
usually takes place within a few seconds, verification may take roughly 10 minutes or longer due to
the complex algorithms involved in bitcoin mining.

Getting Started with Bitcoin Trading 8

Key Milestones
in Bitcoin’s History

AUGUST AUGUST OCTOBER

2007 2008 2008

Bitcoin is in the pipeline Bitcoin.org is born! The white paper is released

Satoshi Nakamoto began laying the The registration of Bitcoin.org becomes Nakamoto publishes a paper called “A
groundwork for Bitcoin. While he is a reality! Peer-to-peer Electronic Cash System”
believed to be living in Japan, it is that explains the Bitcoin currency and
speculated that Nakamoto may be a solves the problem of double spending
pseudonym used by several people. so as to prevent the currency from
being copied.

JANUARY OCTOBER MAY

2009 2009 2010

First Bitcoin transfer An exchange rate is set 10,000 BTC for a Pizza
The very first bitcoin transaction Bitcoin exchange rate is established The first, real-world bitcoin transaction
ever happened at block 170 between by the new Liberty Standard. The value was from Laszlo Hanyecz who spent
Nakamoto and Hal Finney, a developer of the digital currency is set as follow: 10,000 Bitcoins (roughly US$25 at that
and a cryprographic activist. US$1 = 1,309.03 BTC. time) to buy a pizza.

Continues on the next page

Getting Started with Bitcoin Trading 9

Key Milestones
in Bitcoin’s History

JUNE MARCH MAY

2011 2013 2013

The Great Bubble of Bitcoin Market cap hits $1 billion First Bitcoin ATM appears
Bitcoin exchange rate plunged to nearly The total bitcoin market cap reaches The world’s first bitcoin ATM is debuted
US$10, just four days after its peak at US$1 billion. One month later, the value in San Diego, California.
US$31.91. of Bitcoin exceeds US$100.

NOVEMBER OCTOBER AUGUST

2013 2015 2017

Bitcoin surpasses $1000 Bitcoin classed as commodity Bitcoin worth nearly 3 times
Bitcoin price climbs to a new record of Bitcoin is declared as commodity in the the price of gold
US$1242. US like gold and oil. Bitcoin sees its market value exceeding
the price of gold by nearly three times.

Getting Started with Bitcoin Trading 10

Bitcoin vs.
Mainstream Currencies
Bitcoin behaves differently from other conventional currencies and these differences are what make
Bitcoin such a powerful and highly sought-after currency. Let’s take a look at a few noteworthy
features that distinguish Bitcoin from traditional currencies.

Bitcoin is Decentralised
01 Unlike conventional currencies which are subject to regulation and supervision by
a Central authority, Bitcoin works on a peer-to-peer network that is powered by its
users and is completely independent from any bank or government.

No Physical Form
02 Bitcoin is fully virtual – it can be used to exchange online credits for goods and
services from several retailers and online businesses around the world. It is therefore
an intangible form of money and as such bitcoins are stored in digital wallets.

Bitcoin has Scarcity

03 The total number of bitcoins that are expected to be created will never exceed 21
million. While traditional currencies can be issued whenever governments or Central
banks decide, bitcoin’s supply is limited.

Bitcoin is not Ubiquitous

04 Although bitcoin’s acceptance has grown all over the world, the digital currency has
not yet been embraced by the world at large. That makes it impossible to rely entirely
on bitcoin for all payments.

Transparency
05 Bitcoin payments can be made without personal information tied to the transaction.

Payments are Irreversible

06 Bitcoin transactions are not reversible, however, they can only be refunded by the
receiver of the funds.

Getting Started with Bitcoin Trading 11

The Pros and Cons
of Bitcoin
Like any other currency, there are advantages and disadvantages with using bitcoin:

PROS +
Global currency which can be exchanged anywhere, anytime

Not subject to banking regulations, capital controls, government oversight

Transparent and neutral

Limited transaction fees

Full control of funds

Growth in institutional acceptance

Fast transactions

CONS -
Subject to controlled supply

Bitcoin valuation fluctuates

Ongoing development

Lack of recourse

As with every digital currency, security is always an issue

Getting Started with Bitcoin Trading 12

02
The Bitcoin Economy
Bitcoin’s popularity increased immensely in the wake of the global financial crisis that reduced the
credibility of banking institutions and led to the imposition of capital controls by governments. In
this chapter you will discover the basic economics behind bitcoin such as the key drivers of the
cryptocurrency’s price.

Getting Started with Bitcoin Trading 13

How Bitcoin Gained
Ground Over Time
In the years following the speculative bubble at the end of 2013, bitcoin has seen a strong resurgence
of interest among global investors as the wider bitcoin ecosystem has matured significantly and an
increasing number of institutions accept the digital currency.

Investors do not only approach bitcoin as a financial instrument to speculate on, but they also use it
as an alternative to traditional stores of value such as gold thanks its volatility.

In the wake of the uncertainty that has been troubling global financial markets and the financial
shocks that key events like Trump’s electoral win and the Brexit vote brought about, bitcoin has
emerged as a ‘safe haven asset’, either as a means of transferring money across borders or as a
means of protecting it from bail-ins and erosion by inflation. For instance, in China, where capital
controls are applied, wealthy Chinese investors are deprived of investment choices, therefore they
resort to bitcoin as an asset to store value in. Bitcoin is immune to capital controls and currency
manipulation and does not prevent people from moving money to where they wish.

Unlike traditional currencies, bitcoin not only survived but also

thrived in the aftermath of market-shaking events.

To a great extent, this is owed to the cryptocurrency’s intrinsic property of being borderless, frictionless
and largely unregulated. Whether one views bitcoin as a phenomenon or a legitimate institution that
is here to stay, bitcoin is on track to become the latter.

Getting Started with Bitcoin Trading 14

What drives
the Price of Bitcoin
Nowadays, more and more individuals use bitcoin for various transactions as they have more
confidence and trust in it. In addition to this, numerous startups have been spawned by bitcoin in
a bid to monetise the fast-developing bitcoin market. The growing acceptance of bitcoin all over
the world and the upward trend of the digital currency have played a vital role in the increase of the
cryptocurrency’s value over time.

The value of bitcoin is measured in part by its perceived value, that is what people believe the digital
currency is worth. When bitcoin was first introduced it had no value at all. Then gradually, as more
transactions were recorded on the blockchain, bitcoin’s overall value was increasing, which points to
the fact that value is essentially what people are willing to spend on it.

Bitcoin’s price is influenced by what market participants are willing to pay.

If more people want to buy bitcoins, then the price will increase. If more
people want to sell, the price will decrease.

The price of bitcoin has hit a record high in December 2017, soaring above $17,000.
Source: Coindesk

Getting Started with Bitcoin Trading 15

Bitcoin
Supply and Demand
Interestingly, the cryptocurrency’s supply is limited with a market cap of 21 million BTC, which means
that the total amount of bitcoins in circulation will never exceed that number. Bitcoins are created at a
decreasing rate, therefore, demand must follow this level of inflation to keep the price stable. Bitcoin’s
price is subject to frequent fluctuations – both upwards and downwards; this is largely because the
bitcoin market is relatively small and it doesn’t take significant amount of money to move the market
price, which in turn makes the price of bitcoin somewhat volatile.

The number of daily confirmed Bitcoin transactions has surpassed 400,000 according to latest statistics.
Source: Blockchain.info

Getting Started with Bitcoin Trading 16

03
The Future of Bitcoin
What is really intriguing with Bitcoin nowadays, it is not just that it is growing in acceptance and
surging in value. Experts recognise the transformative socio-economic impact of Bitcoin, consider-
ing it as one of the ways the world’s financial problems will be fixed.

Getting Started with Bitcoin Trading 17

Projections about
the Future of Bitcoin
Much of the debate about the future of bitcoin today revolves around the longevity and possible
development of the digital currency. Whether cryptocurrencies like bitcoin, ethereum or litecoin will
become the norm in the near future remains to be seen. Experts unanimously view the cryptocurrency
as an integral part of the new world economy that is able to revolutionise the current economic
structure and change how banks and financial institutions operate.

Bitcoin may spread rapidly in the future as a means for transferring funds internationally and
clearing transactions, eliminating the hassle of excessive transfer time and costly fees that
come along with mainstream payment methods such as banks, credit and debit cards and
checks.

Countries with weak institutions and unstable national currencies could choose to adopt virtual
currencies like bitcoin, rather than a foreign currency because bitcoin offers a better “value for
money” option.

Some fiat currencies may be subject to inflation in the far future and be dropped entirely as
bitcoin becomes widespread. This is not expected to happen any time soon, but as the global
banking sector has weakened significantly since the onset of the economic crisis– people tend
to use bitcoin because its value increasingly surges and it is becoming more stable.

Central Banks realise the potential of blockchain technologies which are capable of providing
regulators around the world with advanced tools to accomplish their mission of monitoring the
safety and soundness of the financial system more effectively. It’s going to be very interesting
to watch the growth of bitcoin as more and more financial institutions embrace it.

I think it may not be wise to dismiss virtual currencies […]

Citizens may one day prefer virtual currencies.
Christine Lagarde
Head of International Monetary Fund (IMF)

Getting Started with Bitcoin Trading 18

04
Trading Bitcoin
Capitalising on the incredible rally in blockchain asset prices, FX brokers increasingly offer Bitcoin
as CFDs. Bitcoin traders look to make profit by speculating on which way bitcoin’s price will go, it
is just like taking positions in FX, stocks and commodities. Read on to find useful information and
approaches to Bitcoin trading and discover how you can start trading the world’s most popular
cryptocurrency.

Getting Started with Bitcoin Trading 19

Understanding
Bitcoin Volatility
Bitcoin has caught the eye of global investors who have witnessed a rapid rise in the price of the
digital currency. The allure of bitcoin lies also in its volatility which makes it appealing to short term
and algo forex traders. While daily movements in Forex rarely exceed 1% in any currency pair, Bitcoin’s
daily movement is usually around 4%.

Understanding what causes the swings in the price of bitcoin is vital if you are looking to invest in the
digital currency. The following are some crucial factors that affect bitcoin’s volatility:

Rate of adoption and investment

When going through periods of rapid adoption and investment by individual investors and large
corporations such as JP Morgan, Goldman Sachs and American Express, bitcoin’s price surges. On
the contrary, when adoption rates slow, the price tends to fall.

Bad press
Negative publicity can significantly hamper adoption rates and cause a flux in bitcoin’s price. This
was the case in October of 2013 when the FBI shut down Silk Road under charges that the platform
was used for selling drugs and weapons. In light of reports that the FBI seized $28.5 million in bitcoins
from the owner of the platform, the public associated bitcoin with illegal transactions. As a result,
prices plummeted temporarily.

Regulation
Regulatory changes and governmental stance on the cryptocurrency may also lead to price
fluctuations. For instance, when the Chinese government announced its intention to shut down
domestic bitcoin exchanges in September 2017, bitcoin prices took a serious dip.

Getting Started with Bitcoin Trading 20

Trading Strategies
and Risk Management
When it comes to trading bitcoin, the same trading strategies can be used as in other forms of trading
like FX, stocks and futures. These include scalping, day trading, swing trading and position trading.
Some traders prefer a strategy based on Fibonacci retracement to identify support and resistance
levels; whilst others favour moving averages.

Traders know that bitcoin is a volatile instrument and with this comes the need to define and control
risk. Therefore, they apply technical tools like trendlines and retracements to get clues on when to
enter a trade and when to get out. This way, they are able to define the bullish or bearish bias and
limit risk.

Getting Started with Bitcoin Trading 21

How to trade Bitcoin
with Tickmill
Tickmill offers you the opportunity to go long or go short on bitcoin and take advantage of volatility
without physically owning the cryptocurrency. Bitcoin trading is available 24 hours a day, 5 days a
week. You can trade Bitcoin against the US dollar on our MT4 platform available on desktop, mobile
and web.

Do your research
The cryptocurrency market behaves differently from other markets.
Ensure you know the market well before embarking on bitcoin trading.

Open a trading account

Choose a trading account that best suits your trading needs.

Fund your account

Make a deposit using one of our convenient and secure payment options.

Choose your strategy

What approach will you take to trade bitcoin?
Select a trading strategy based on your individual goals and preferences.

Place your trade

Proceed with order entry process by determining your preferred type of order,
position size etc.

Close your position

Close your trade when you feel you have reached your target or simply want
to limit potential losses.

Bear in mind that Cryptocurrencies are offered as CFDs (Contracts for Difference) which are leveraged products.
Trading CFDs can magnify your gains when the market moves in your favour, but it is also possible for you to
sustain losses that may exceed your initial trading capital.

Getting Started with Bitcoin Trading 22

Why Trade Bitcoin
with Tickmill?
Get access to the fast-growing cryptocurrency market.

Benefit from competitive pricing, deep liquidity and reliable execution.

0 commissions

No hidden fees

Leverage 1:5

Expert Advisors allowed

Average order execution speed 0.1 second

Find out more about Bitcoin contract specifications.

Losses can exceed the initial deposit.

Getting Started with Bitcoin Trading 23

Why our Clients
Choose us
Tickmill is a global multi-asset broker offering best-in-class trading services to retail and institutional
clients worldwide.

Built by traders for traders, our extensive trading experience and deep understanding of traders’
needs allow us to provide them with the right conditions to excel.

FCA UK Safety of User-friendly All trading

regulated Client funds trading environment strategies allowed

Variety of Advanced Global trading Multilingual Client

payment methods trading tools and servers support
webinars

Getting Started with Bitcoin Trading 24

Glossary
Bitcoin: It is the first decentralized peer-to-peer payment network and a digital currency that is
powered by its users with no central authority or middlemen.

Bitcoin address is a unique number that “stores” the bitcoins. Bitcoin addresses are used to send
and receive bitcoins just like e-mail addresses are used to send and receive emails.

Blockchain a public record of Bitcoin transactions in chronological order.

BTC: An abbreviation for the bitcoin currency.

CFD: A contract for difference (CFD) is a financial instrument that allows traders to invest into an
asset class without actually owning the asset.

Cryptocurrencies are currencies that do not have a centralized lender like a country Central Bank.
They are created using computer encryption techniques that limit the amount of monetary units (or
coins) created and then verify any transfer of the funds after creation.

Ethereum: Functions as an open software platform through which people can use ether tokens to
create and run applications and, more importantly, smart contracts.

Exchange: In the world of digital currencies, an exchange refers to the practice where account holders
exchange on digital currency for another or a Fiat currency for a digital currency.

Expert Advisor: An automated strategy developed in MQL4 language that can fully automate analysis
and trading processes.

Fiat currency: A “regular” currency such as Dollar or Pound that is given value based on people giving
them a value.

Ledger: A physical or electronic log book containing a list of transactions and balances typically
involving financial accounts. The Bitcoin blockchain is the first distributed, decentralized, public
ledger.

Getting Started with Bitcoin Trading 25

Litecoin is a cryptocurrency that runs on a peer-to-peer basis and facilitates larger transactions in
higher volume and in a faster time frame.
Mining is the process used to create new bitcoins and complete transactions in the blockchain.
As a reward for their services, Bitcoin miners can collect transaction fees for the transactions they
confirm, along with newly created bitcoins.

Private key: is a string of data that allows the bitcoin owner to spend the bitcoins from his bitcoin
wallet through a cryptographic signature.

Proof of work: is a protocol that has the main goal of deterring cyber-attacks such as a distributed
denial-of-service attack (DDoS) which has the purpose of exhausting the resources of a computer
system by sending multiple fake requests.

Public key: is a cryptographic key that acts like a bank account number where funds are sent to.

Rate of adoption: The relative speed at which participants adopt an innovation.

Reward: This term refers to the “reward” that the Miner receives for successfully hashing a transaction
block.

Risk management: The use of strategies to control or reduce financial risk.

Satoshi Nakamoto: The inventor of Bitcoin.

Silk Road: An underground website, as part of the “dark web”, that was essentially the black market
online. One could purchase illegal drugs, organs or hire assassins online. The site used cryptocurrencies
such as bitcoin and was shut down in 2013 by the FBI.

Transaction: An entry in the blockchain that describes a transfer of bitcoins from one address to
another. Bitcoin transactions may contain several inputs and outputs.

Volatility is the observed price movement of an asset.

Wallet: A software that holds all bitcoin addresses and secret keys. It can be used to receive and
store Bitcoin.

Getting Started with Bitcoin Trading 26

 Did you enjoy reading
this ebook?
Visit our blog to explore a wealth of ideas
and information on global economic events and their impact on markets.

Market Insights | Fund Analysis | Tech Analysis | Trading Psychology

Risk warning: Cryptocurrencies like Bitcoin are extremely volatile and the price can suddenly move sharply due
to lack of liquidity and news. There is little or no fundamental reasoning behind its pricing and as such trading
CFDs in Bitcoin pose a significant risk to all Clients. The price of Bitcoin can trade during the weekend, resulting
in a substantial price change between Friday and Monday. It should only be traded by those clients who fully
understand that they risk losing all of their investment, or more, in a short period of time. Only speculate with
funds that you can afford to lose and seek independent advice if necessary.

Disclaimer: The content in this E-book comprises information and data that should not be construed as
containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions
in financial instruments and/or a guarantee and/or prediction of future performance. Tickmill, its affiliates,
agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness
of any information or data made available and assume no liability as to any loss arising from any investment
based on the same.

Getting Started with Bitcoin Trading 27

 We want traders to succeed

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